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EN BANC

[G.R. No. L-2372. August 26, 1949.]

INTERNATIONAL HARVESTER COMPANY OF THE PHILIPPINES ,


petitioner-appellee, vs . CRISANTO ARAGON, Judge of Municipal Court
of Manila, and YARAS & COMPANY, FAR EAST , respondents-appellants.

Roxas, Picazo & Mejia for appellants.


Ross, Selph, Carrascoso & Janda for appellee.

SYLLABUS

1. ADMIRALTY; JURISDICTION; MARITIME CONTRACTS. — Admiralty has


jurisdiction over all maritime contracts, in whatever form, wherever they were executed
or are to be performed, but not over non-maritime contracts.
2.—ID.; ID.; MARITIME CONTRACTS DEPEND ON THE SUBJECT MATTER
THEREOF. — Whether or not a contract is maritime depends not on the place where the
contract is made and is to be executed, making the locality the test, but on the subject
matter of the contract, making the true criterion a maritime service or a maritime
transaction.
3. ID.; ID.; CONTRACT OF AFFREIGHTMENT; PROCEEDING "IN REM" OR "IN
PERSONAM." — Admiralty has jurisdiction of a proceeding in rem or in personam for the
breach of a contract of affreightment, whether evidenced by a bill of lading or a charter
party. And typical of a controversy over contracts of affreightment is a suit of one party
against the other for loss of or damage to the cargo.
4. PROHIBITION; COURTS; JURISDICTION; JUSTICE OF THE PEACE COURTS
HAVE NO JURISDICTION IN ADMIRALTY CASES. — Cases in admiralty fall within the
original jurisdiction of the Courts of First Instance to which the jurisdiction of the justice
of the peace courts does not extend and if the latter courts take cognizance of such
cases, they may be restrained by the writ of prohibition.

DECISION

PARAS , J : p

On July 9, 1947, the respondent-appellant, Yaras & Company, Far East, led a
complaint in the Municipal Court of Manila (civil case No. IV-262) against the Manila
Terminal Co., Inc., and International Harvester Company of the Philippines. The
complaint alleges that the defendant Manila Terminal Co., Inc., is in charge of the
custody and delivery to the respective owners of cargoes discharged at the
Government piers in the City of Manila; that the defendant International Harvester
Company of the Philippines is the agent in the Philippines of the vessel Belle of this Sea;
that on September 27, 1946, the S/S Belle of the Sea took on board at Los Angeles,
California, U. S. A., goods for shipment to Manila, Philippines, and covered by Bill of
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Lading No. 105; that the S/S Bellee of the Sea arrived in Manila on December 23, 1946,
and discharged her cargo at the Government piers under the supervision and custody
of the defendant Manila Terminal Co., Inc.; that out of the goods covered by Bill of
Lading No. 105, one carton of assorted samples with a stipulated value of P200 was
not delivered to Yaras & Company; and said merchandise was lost through the
negligence either of the Manila Terminal Co., Inc., or of the International Harvester
Company of the Philippines. The complaint prayed for judgment either against the
defendant Manila Terminal Co., Inc., or the International Harvester Company of the
Philippines for the amount of P200, with legal interest from the date of the ling of the
complaint.

Before the trial could be proceeded with, the International Harvester Company of
the Philippines led a motion to dismiss, on the ground that the Municipal Court of
Manila had no jurisdiction to try the case because the action involves admiralty or
maritime jurisdiction, which motion was overruled by the municipal court on December
16, 1947. In due time, the International Harvester Company of the Philippines filed in the
Court of First Instance of Manila a petition for prohibition (civil case No. 4328) against
the Hon. Crisanto Aragon, Judge of the Municipal Court of Manila, and Yaras &
Company, Far East, for the purpose of restraining said respondent judge from
proceeding with civil case No. IV-262 in so far as the International Harvester Company
of the Philippines was concerned, on the ground that admiralty or maritime jurisdiction
16 involved. After trial, the Court of First Instance of Manila rendered judgment in favor
of the petitioners, International Harvester Company of the Philippines, ordering the
respondent judge of the municipal court to desist from taking cognizance of civil case
No. IV-262 as against the International Harvester Company of the Philippines. From this
judgment the respondents have appealed.
From the facts alleged in the complaint led in the municipal court, it is clear that
the International Harvester Company of the Philippines, as agent in the Philippines of
the vessel S/S Belle of the Sea, is alternatively being held liable for the loss of the cargo
in question through its negligence. Inasmuch as it is expressly alleged that the cargo of
the S/S Belle of the Sea was discharged on December 23, 1946, at the Government
piers under the supervision and custody of the Manila Terminal Company, Inc., the
International Harvester Company of the Philippines may be held liable only on the
assumption that the goods had been lost in transit or before being discharged at the
pier. In other words, the liability of the International Harvester Company of the
Philippines is predicated on the contract of carriage by sea between the International
Harvester Company of the Philippines and Yaras & Company as evidenced by Bill of
Lading No. 105, independently of the liability of the Manila Terminal Co., Inc., as
operator of an arrastre service.
Admiralty has jurisdiction over all maritime contracts, in whatever form, wherever
they were executed or are to be performed, but not over non-maritime contracts. (2
Corpus Juris Secundom, p. 84.) Whether or not a contract is maritime depends not on
the place where the contract is made and is to be executed, making the locality the test,
but on the subject-matter of the contract, making the true criterion a maritime service
or a maritime transaction. (Id., p. 85.) Speci cally, admiralty has jurisdiction of a
proceeding in rem or in personam for the breach of a contract of affreightment,
whether evidenced by a bill of lading or a charter party. (Id., pp. 90-91.) And typical of a
controversy over contracts of affreightment is a suit of one party against the other for
loss of or damage to the cargo. (1 American Jurisprudence, p. 567.) This is the very
case now before us, because the respondent Yaras & Company seeks to recover from
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the petitioner International Harvester Company of the Philippines the value of a certain
lost cargo.
The contention of the respondent Yaras & Company that admiralty jurisdiction is
not involved herein because the contract in question was made upon land and to be
terminated upon land, merely re ects the English rule which had long been rejected in
the United States. It is now settled in the latter country that "the jurisdiction of admiralty
in matters of contract depends upon the subject-matter, i. e., the nature and character
of the contract, and that the English rule which conceded jurisdiction (with few
exceptions) only to contracts made upon and to be performed upon navigable waters,
is inadmissible, the true criterion being that the contract has reference to maritime
service or maritime transaction." (Benedict on Admiralty, 6th Ed., Vol. 1, p. 127.) We
choose to adopt the sound American rule. Even in England the English rule was not
without protest. Lord Kenyon, in Menetone vs. Gibbons, 3 Term, 269, had expressed the
following criticism: "if the admiralty has jurisdiction over the subject-matter, to say that
it is necessary for the parties to go upon the sea to execute the instrument borders
upon absurdity."
The respondent Yaras & Company cannot invoke the rule against multiplicity of
suits, for the simple reason that said rule has to be subservient to the superior
requirement that the court must have jurisdiction. In view of our conclusion that the
cause of action of said respondent against International Harvester Company of the
Philippines involves admiralty over which the courts of rst instance have original
jurisdiction (Par. 4, Sec. 56, Act No. 136 of the Philippine Commission, as reproduced in
sec. 43 [ d] of Republic Act No. 296), and to which the jurisdiction of the justice of the
peace courts (including municipal courts) does not extend (sec. 68, Act No. 136 of the
Philippine Commission, as amended by Commonwealth Act No. 4090, reproduced in
par. 2, sec. 88, Republic Act No. 296), the respondent judge was properly restrained
from further proceeding with civil case No. IV-262.
We hold also that prohibition is the proper remedy, since the respondent judge
was taking cognizance of the case over which he had no jurisdiction and his order
overruling the motion to dismiss led by the petitioner-appellee is interlocutory and
therefore not appealable. (Sec. 2 of Rule 67, Rules of Court 2.) At any rate, the remedy
of appeal available when the case shall have been decided on the merits, is inadequate.
The appealed judgment is therefore a rmed, with costs against the appellant
Yaras & Company. So ordered.
Moran, C.J., Ozaeta, Feria, Bengzon, Padilla, Tuason, Montemayor and Reyes, JJ.,
concur.

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